This slowdown is cyclical, not structural: Ashu Suyash

Surabhi Mumbai | Updated on December 23, 2019 Published on December 21, 2019

The problem is on the consumption side and it will take a while for the GDP to revert to the 6 per cent-mark, says the Crisil chief

Expressing optimism about the acquisition of Greenwich Associates for $40 million, Ashu Suyash, Managing Director and CEO, CRISIL, said this will help the company strongly establish itself in the global market as well.

“Bringing the two brands together will make us a global leader in the benchmarking analytics space,” she told BusinessLine in an interview.

Talking about the economy, she said that it will take a couple of quarters to get the GDP growth back to 6 per cent and, in the near term, a revival in consumption is essential. Excerpts:

What are the sectors that will benefit CRISIL from this acquisition?

Greenwich Associates is a strong global brand with a track record of nearly five decades. We already have a presence in benchmarking analytics because of our coalition business, which serves the investment banks globally. Greenwich Associates has strong presence in investment management, wealth management and commercial banking. Bringing the two brands together will make us a global leader in the benchmarking analytics space. It will establish CRISIL strongly in the global market as well.

CRISIL recently cut GDP growth rate to 5.1 per cent for the fiscal. When do you expect a revival in the economy?

We have lowered our estimates on GDP, given the slowdown we are seeing. The slowdown is on the consumption side — one of the strong growth engines for India for over a decade. It is going to take a bit of time for the GDP to get back to the 6 per cent-mark. It is not something that we see happening overnight. The NBFC sector is seeing a lot of headwinds and this is one of the factors that has accentuated the slowdown. Some of the core industries are also seeing a demand issue — auto, some consumer durables sector. In that sense, it will take a couple of quarters before GDP gets back to the 6 per cent-mark.

Is 6 per cent GDP growth likely by the end of 2020-21?

If one takes a 2021 kind of view, we do see it reaching 6 per cent. From an overall perspective, India has strong growth potential. We see this as more of a cyclical slowdown and not a structural one. We would watch for the Budget announcements to see if the government is looking at stepping on spending in a lot of ways and we need to see investment revival. As we have seen in the past, initially, it is always from the government side. Capacity utilisation has been operating at below-expected levels for a while. So investment uptick will take longer. This not not be a material contributor in the near term; it will be a long-term positive factor. Near term is about consumption revival.

What is your view on core inflation?

At the moment, we have seen core inflation climb up and there are a number of things that have contributed to it. We would like to watch for a couple of quarters to see whether this trend will continue, especially because we are witnessing a slowdown now. Normally, when demand is high and you see inflation climbing up...that is a different way of looking at it.

Are there any other sectors that Crisil is keen to get into?

Our strategy is that we want to be a leader in the businesses we are in. We look at an organic and inorganic strategy. Crisil has had a good track record of delivering on its acquisitions. In this instance, we don’t have such a strong hold in the investment management space, wealth management and commercial banking.

This acquisition will establish that and also allow us to cross-sell our other services and products. Greenwich Associates has a number of proprietary offerings such as MarketView, ACCESS and Explorer. We can load a lot more of our research and data. Our focus is on adding well-recognised intellectual property-based offering.

Does Greenwich Associates become part of S&P group?

S&P own 68 per cent in Crisil, and so CRISIL is an S&P Global company. Greenwich Associates is a Crisil acquisition, and so it comes as a part of the overall group.

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Published on December 21, 2019
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